Oil prices rise with Brent crude up 0.1 percent above $68.50 on strong demand data
Brent crude futures rose by 8 cents, or 0.1 percent, reaching $68.60 a barrel at 06:30 GMT (currently trading above $68.50). Meanwhile, U.S. West Texas Intermediate crude futures increased by 16 cents, or 0.2 percent, to $66.54 (currently trading above $66.45). Both benchmarks had declined by more than 0.2 percent in the previous session.
U.S. President Donald Trump stated that letters notifying smaller countries of their U.S. tariff rates would be sent out soon, and he mentioned on Wednesday that he would likely implement a blanket 10 percent or 15 percent tariff on these nations. New agreements with Indonesia and Vietnam were announced this week. Trump also expressed renewed optimism regarding the prospects of a deal with Beijing concerning illicit drugs and hinted that a trade deal with India was very close, while an agreement could potentially be reached with Europe as well.
U.S. crude inventories decreased by 3.9 million barrels to 422.2 million barrels last week, according to the Energy Information Administration's report on Wednesday. This decline was steeper than the forecasted 552,000-barrel draw, indicating stronger refinery activity, tighter supply, and increased demand. The latest snapshot of the U.S. economy by the central bank, released on Wednesday, revealed that activity had picked up in recent weeks. However, the outlook was described as 'neutral to slightly pessimistic,' as businesses reported that higher import tariffs were exerting upward pressure on prices.
Read more: Crude oil prices climb 0.2 percent to $68.98 amid summer demand expectations, OPEC optimism
China's growth and fuel demand
In the meantime, data from China indicated that growth slowed in the second quarter, but not as significantly as previously feared, partly due to front-loading to circumvent U.S. tariffs, alleviating concerns about the state of the world's largest crude importer's economy. Additional data showed that China's June crude oil throughput rose by 8.5 percent compared to a year ago, suggesting stronger fuel demand.
Oil prices experienced an upswing on Wednesday, driven by expectations of robust summer demand from the world's two largest consumers, the United States and China. However, these gains were tempered by analysts' caution regarding the broader economic landscape. Prices have fluctuated within a narrow range as signs of steady demand, driven by increased travel during the Northern Hemisphere summer, contend with worries that U.S. tariffs on trading partners could hinder economic growth and fuel consumption.
Brent crude futures climbed by 13 cents, or 0.2 percent, to $68.84 a barrel by 04:11 GMT. Meanwhile, U.S. West Texas Intermediate crude futures increased by 25 cents, or 0.4 percent, reaching $66.77. This rebound followed two consecutive days of declines, as the market downplayed potential supply disruptions after U.S. President Donald Trump threatened tariffs on Russian oil purchases.
OPEC's optimistic outlook
OPEC
's outlook remains more optimistic, according to Sachdeva, who referenced the cartel's monthly report released on Tuesday. The report projected that the global economy would perform better in the second half of the year, improving the oil demand outlook. Brazil, China, and India are exceeding expectations, while the U.S. and EU are recovering from last year, the report noted. 'The technicals may offer short-term relief, but fundamentally, the market lacks momentum,' Sachdeva remarked. 'Until clarity emerges on global growth, policy direction, and real demand recovery, especially from Asia, the crude complex looks set to drift sideways.'
Oil prices declined on Tuesday following U.S. President Donald Trump's extensive 50-day deadline for Russia to conclude the Ukraine war and avoid sanctions, alleviating immediate supply concerns. Brent crude futures fell by 29 cents, or 0.4 percent, to $68.92 a barrel by 03:42 GMT, while U.S. West Texas Intermediate crude futures decreased by 35 cents, or 0.5 percent, to $66.63. Both contracts had settled more than $1 lower in the preceding session.
Initially, oil prices surged due to news of potential sanctions but later relinquished these gains as the 50-day deadline sparked optimism that sanctions might be sidestepped. Traders are now assessing whether the U.S. will indeed impose steep tariffs on nations that continue to trade with Russia. On Monday, Trump announced new weapon supplies for Ukraine and indicated on Saturday that he would impose a 30 percent tariff on most imports from the European Union and Mexico starting August 1, adding to similar warnings directed at other nations. Such tariffs could impede economic growth, potentially dampening global fuel demand and exerting downward pressure on oil prices.
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